Promoting greater flexibility in labour market policy

A variety of LEED studies have determined that more flexibility in the management of programmes is required for labour market policy to contribute fully to local strategies for economic growth and social inclusion.

In particular, the LEED study on Integrating Employment, Skills and Economic Development of 11 countries, published by the OECD as Breaking out of policy silos (2010) found that flexibility in the management of government policies is the most important factor affecting policy integration at the local level.

When local organisations are not able to adapt their policies, often little is achieved when it comes to implementing a joint local strategy. This issue was discussed in depth at a conference attended by ministers and other high level policy officials in Venice in 2008 on The Twin Challenges of Labour Market Policy. At this conference, labour ministers from OECD countries in collaboration with the OECD Employment and Social Policy division, analysed the local flexibility of labour market policy in 25 OECD countries, and adopted the Venice Action Statement.

LEED has implemented a study on “Managing Flexibility and Accountability” to build on these findings. Canada, Belgium (Flanders), Denmark and The Netherlands each participated. Click here for individual country reports, a synthesis report and a report on accountability in decentralised employment service regimes.

Tools to increase flexibility

The way in which policies are managed varies greatly between OECD countries. More traditional systems of public administration emphasise legal and fiscal accountability, while countries which have moved towards a "new public management" approach give greater weighting to processes such as decentralisation and managerial discretion. Governments are often wary of awarding greater flexibility to local agencies for fear of reducing accountability and prompting a deterioration in the quality of service provision. Thus national governments need to be encouraged to experiment with promoting new forms of horizontal accountability locally.

Some tools being used to promote a culture of greater flexibility, as will be examined in the LEED study, are as follows:

- Negotiating targets - consulting at the local level when setting government targets;

- Increasing the use of outcome targets as opposed to output targets;

- Establishing common and cross-sector targets which incentivise local actors to work together;

- Boards and scrutiny panels which allow a wider group of local actors to scrutinise the delivery of national programmes;

- Flexible funding schemes and special funds to encourage creative solutions at the local level; and

- Incremental responsibility - devolving decision making where accountability risk is judged to be minimal.